Oil futures finished above $100 a barrel Tuesday, lifted by brisk economic growth in China and steps toward an Iranian oil embargo in Europe.
China's economy grew 8.9% in the fourth quarter, helping to ease concerns about an oil demand slowdown from the world's second-largest crude consumer. Although the figure was smaller than a year ago, it came in above many analysts' expectations and remains well above rates in the U.S. and Europe.
"If you ask me, 8.9% is still pretty good growth," said Peter Donovan, vice president at oil options brokerage Vantage Trading in New York. "If the bearish thing you're seeing is growth of 8.9%, is that so bearish?"
Light, sweet crude for February delivery settled up $2.01, or 2%, to $100.71 a barrel on the New York Mercantile Exchange. Brent crude on the ICE futures exchange recently traded up 10 cents, or 0.1%, to $111.44 a barrel.
The oil market has increasingly turned to China and other emerging markets to support demand and prices in recent years, as the country continues to enjoy brisk growth despite weakness in the U.S. and Europe. That growth has helped feed surging demand for automobiles and energy, and has made China the second-largest oil consumer after the U.S.
Other commodities, from copper to iron ore to coal, have seen higher prices in recent years due to surging Chinese demand.
"People have overblown this whole idea that China is slowing down," said Carl Larry, head of the trading advisory Oil Outlooks and Opinions in New York.
Tuesday's rally marks a quick return of the U.S. benchmark to the $100 mark. Nymex futures had spent all of January above the psychological level until a sell-off late last week sent it as low as $98.70.
Prices remain supported by a number of factors. In addition to emerging-market demand, the stand-off between Iran and the U.S. and its allies has also added a premium to prices in recent months. On Tuesday, European Union diplomats said European governments are set to implement an Iranian oil embargo by the start of July, according to a report by news agency AFP.
The EU for weeks has been discussing an embargo on Iran's oil exports, but timing has remained a question mark. Some of the EU's most financially stressed countries, including Greece and Italy, are heavily reliant on Iranian crude and are reportedly seeking other sources of supply.
Saudi Arabia, the No. 1 OPEC exporter, has said it could raise production to help offset an Iranian shortfall. But the country's oil minister also indicated Monday that $100-a-barrel oil remained its target price, suggesting that the country has no plans to flood the market with additional crude.
Front-month February reformulated gasoline blendstock, or RBOB, settled up 3.71 cents, or 1.4%, to $2.7713 a gallon. February heating oil settled up 1 cent, or 0.3%, to $3.0372 a gallon.
Copyright (c) 2012 Dow Jones & Company, Inc.
WHAT DO YOU THINK?
Click on the button below to add a comment.
Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.
More from this Author
Most Popular Articles
From the Career Center
Jobs that may interest you